FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Big Blue Rental Corp. provides rental agent services to apartment building owners. Big Blue Rental Corp.’s preliminary income statement for August 2019 and its August 31, 2019, preliminary
- Rental commissions of $670 had been earned in August but had not yet been received from or billed to building owners.
- When supplies are purchased, their cost is recorded as an asset. As supplies are used, a record of those used is kept. The record sheet shows that $530 of supplies were used in August.
- Interest on the note payable is to be paid on May 31 and November 30. Interest for August has not been accrued—that is, it has not yet been recorded. (The Interest Payable of $90 on the balance sheet is the amount of the accrued liability at July 31.) The interest rate on this note is 10%.
- Wages of $430 for the last week of August have not been recorded.
- The Rent Expense of $1,530 represents rent for August, September, and October, which was paid early in August.
- Interest of $450 has been earned on notes receivable but has not yet been received.
- Late in August, the board of directors met and declared a cash dividend of $4,500, payable September 10. Once declared, the dividend is a liability of the corporation until it is paid.
Required:
a. Using the columns provided on the income statement and balance sheet for Big Blue Rental Corp., make the appropriate adjustments/corrections to the statements, and enter the correct amount in the Final column. (Hint: Use the five questions of transaction analysis.
(Enter amounts in the Adjustments/Corrections columns as positive numbers. Net income Adjustments/Corrections: Please use the numbers from the Income Statement and enter amounts in both the Debit and Credit columns.)
Transcribed Image Text:BIG BLUE RENTAL CORP.
Income Statement
August 2019
Adjustments/ Corrections
Preliminary
Debit
Credit
Final
Commissions revenue
$
9,800
$
670
$
10,470
Interest revenue
3,400
450
3,850
Total revenues
$
13,200 $
1,120 $
14,320
Rent expense
$
1,530
Wages expense
2,550
430
2,980
Supplies expense
530
(530)
Interest expense
Total expenses
$
4,080 $
960 $
$
2,450
Net income
$
9,120
$
11,870
%24
%24
Transcribed Image Text:BIG BLUE RENTAL CORP.
Balance Sheet
August 31, 2019
Adjustments / Corrections
Preliminary
Debit
Credit
Final
Assets
Cash
$
1,650
Notes receivable
28,000
Commissions receivable
Interest receivable
Prepaid rent
Supplies
3,000
Total assets
$
32,650
$
0 $
0 $
Liabilities and Stockholders' Equity
Accounts payable
60
Notes payable
5,400
Interest payable
90
Wages payable
Dividends payable
Total liabilities
$
5,550 $
O $
O $
Paid-in capital
$
5,400
Retained earnings:
Balance, August 1
12,580
Net income
9,120
Dividends
Balance, August 31
21,700 $
0 $
0 $
Total stockholders' equity
27,100
$
$
$
Total liabilities and stockholders' equity
32,650 $
%24
%24
ㅇ
%24
24
%24
%24
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